Antitrust

Legislative and case law developments and consequent industry changes over the past decade have led to a surge in opt-out collective proceedings in the UK’s Competition Appeal Tribunal.  Increasingly, large tech companies have found themselves the target of high-value mass claims, often brought by competition law experts.

In this post, we explore the factors fuelling this trend and the future developments likely to continue to fan the flames.

How did we get here? A whistle-stop tour

Previously, in England, private “follow-on” damages actions were the typical route for those affected by competition law breaches to seek direct redress following a finding of infringement by the UK or EU antitrust agencies. This started to change with the Consumer Rights Act 2015, which introduced a groundbreaking collective action regime, including US-style opt-out actions, and has contributed to an increase in standalone claims (as discussed further below; these, unlike follow-on claims, allege a competition breach for the first time and do not rely on an authority’s infringement finding). Crucially, this meant that a class could be established without the engagement of individual members – a notoriously difficult endeavour, particularly in proceedings with low individual claim values (see e.g. Consumers’ Association v JBB Sports – the only case filed under the preceding UK collective damages action regime – where only 130 out of over 1 million potential claimants opted into the case). 

The first applications to the CAT for collective proceedings orders (CPOs) soon followed, including the 2016 Merricks v Mastercard claim. After an initial refusal and appeal to the Court of Appeal, in 2020, the Supreme Court lowered the hurdle for certification and, in doing so, was seen to pave the way for future claims.

Indeed, 85% of active CAT proceedings were issued from 2021 onwards. And all except one are opt-out claims or claims which include opt-out elements.

A target on big tech?

25% of the collective actions brought post-Merricks have been against large tech platforms, with Alphabet/Google, Amazon, Apple and Meta the subject of at least one claim – a trend which shows no signs of slowing. Just last month, two further prospective claims said to exceed £3.5 billion in value were announced, both against Amazon.

This rise in collective actions targeting tech companies may be explained by several core factors:

• Collective actions have become a vehicle for activists, including specialist consumer rights advocates and academic experts, to take action in lieu of/in parallel with regulators – either so that they can achieve redress more promptly than by waiting for infringement decisions, or to take action that they feel regulators should have taken. The claims being advanced are raising novel and complex theories of harm, which will place the CAT at the forefront of legal developments in these areas.
• The identity of the relevant proposed class representatives (PCRs) may also explain the diversification and sophistication of theories of harm, which now range far beyond those traditionally deployed under competition law and seek to address what would typically be considered consumer or privacy law issues. See for example, the “battery throttling” case against Apple or the Facebook data collection case against Meta. Recast as competition law breaches, and therefore arguably within scope of the regime, claimants have seemingly been seeking to take advantage of the lowered bar for certification in opt-out actions to seek compensation for a broader range of alleged wrongdoings in the CAT.
• Would-be claimants will doubtless have been encouraged by the CAT’s apparent patience with proposed class representatives (PCRs), in particular by allowing claimants who do not pass the certification hurdle at their first attempt to try again. See for example Gutmann v Apple, where the CAT adjourned the CPO hearing to allow for further disclosure to enable the PCR to reformulate an element of their case, or Lovdahl Gormsen v Meta, where the CAT stayed the CPO application for six months to enable the PCR to re-articulate the proposed blueprint for trial. Both applications were subsequently granted. In the Meta case, the CAT stated: “where a PCR has sought, responsibly, to be brief and to focus on what material is required for certification, the Tribunal will not allow an application to fail on technical grounds. As has been said on many occasions, collective proceedings are concerned with access to justice, and the certification process needs to be seen in that light.”
• The proliferation of proceedings has gone hand-in-hand with the recent boom in third party litigation funding, which has bankrolled all collective actions in the CAT so far. (See our previous post on this here.) In this regard, the CAT has made clear that it “will be astute to ensure that a system intended to further access to justice does exactly that, and does not become a “cash cow” either for lawyers or for funders.”

What next for UK collective actions?

We expect the following developments to materially impact the surge of collective actions (including against big tech):  

• The new Digital Markets, Competition and Consumers Act 2024 is expected to come into force this autumn and contains several provisions relevant to private competition litigation. Notably, firms designated with strategic market status (SMS) will be deemed to owe a statutory duty to any person who may be affected by an alleged breach of a “relevant requirement”. It follows that a potential claimant would not be required to evidence the relevant duty or prove the constituent elements of a competition claim, and would simply need to prove the breach (and then only in the context of a standalone claim) as well as loss and damage. 
• Further clarity on third party litigation funding may be forthcoming. The Supreme Court decision in PACCAR rendered most existing litigation funding agreements unenforceable, although it is possible that this will be reversed via legislative reform. If not, further judicial guidance is likely to be forthcoming from the Court of Appeal. The CAT recently upheld the enforceability of litigation funding agreements in collective actions brought against Sony, Mastercard/Visa and Apple – promising findings for claimants, now subject to appeals. 
• The CAT’s judgment in the first collective action to reach trial, Le Patourel v BT, is expected imminently. If successful, it will shed light on the CAT’s approach to undistributed damages and, therefore, the returns paid to litigation funders. The judgment would therefore be likely to influence the perceived economic attractiveness of litigation funding investments, which could have a knock-on effect on access to justice for consumers (noting the CAT’s warning above).

As the landscape for collective actions in the UK continues to unfold, companies will need to be ever more vigilant with their business practices and take steps to mitigate exposure to potential large-scale competition claims. With novel theories of harm, a new regulatory landscape, and damages which can dwarf regulatory fines, the heightened risks do not appear to be abating any time soon.